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Title:Three essays on public finance: Voting, tax competition, and optimal club composition
Author(s):Joo, Man-Soo
Doctoral Committee Chair(s):Brueckner, Jan K.
Department / Program:Economics
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Economics, General
Economics, Theory
Abstract:The first essay analyzes the behavior of an imperfectly mobile voter in the presence of property value capitalization. It is shown in a dynamic model that the voter's ideal public spending level reflects a blend of his own preferences and those of the future occupant of his property. Although the voter does not seek to maximize the value of the property, his behavior confirms more closely to this principle the nearer is the date of his departure from the community or the greater is the chance of early departure when he is uncertain about the future. Finally, the analysis shows under some circumstances that the voters who are liquidity-constrained are more likely to behave as property-value maximizers than those are unconstrained.
The second essay investigates whether or not local governments competing for mobile capital interact strategically with their tax rates and/or public expenditure levels, and if so, how they react to each other. Using the Boston SMSA data, this empirical study indicates weak but inconclusive evidence that a jurisdiction responds by decreasing its tax rate when its competing jurisdictions increase their tax rates. Also, it is shown that local governments do not seem to use their public expenditure levels as a strategic variable.
The third essay provides illustrative examples of optimal club configurations in an economy with labor complementarity. As Brueckner (1990) suggests, homogeneous clubs are likely to be optimal when the degree of complementarity is weak or when the divergence in preferences is large. More importantly, this essay shows that a partially mixed configuration, where a mixed club coexists with a homogeneous club, is indeed possible. When the abundant types are higher demanders of the public good, the mixed club coexists with a homogeneous club made up of the scarce-type of individual. Otherwise, either abundant or scarce types can be left over to form the homogeneous club.
Issue Date:1990
Rights Information:Copyright 1990 Joo, Man-Soo
Date Available in IDEALS:2011-05-07
Identifier in Online Catalog:AAI9114283
OCLC Identifier:(UMI)AAI9114283

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